There are many unfortunate occasions in life which call for quick cash. Hospitalization, death, accidents, home and car repairs; these are all situations where an auto title loan can help save the day. If you need money fast but have a low FICO score, one option is to get emergency funds through an auto title loan.
Are There Errors in Your Credit Record?
There are many reasons why you may have got a low score. Some of these include failure to make loan or mortgage payments or credit card dues in time, bankruptcy, accidents, and living beyond your means. Two more common reasons for a low FICO score are reporting errors and identity theft.
These unfortunate situations occur not because of your inability to make timely loan repayments, but because of human error. If you do not get approved for a conventional loan, it is often because of a bad rating.
If you’re unsure about how your rating took a dive, request your credit report from the three main credit bureaus. Each of the bureaus offer free annual credit reports that you can request to keep track of your score. Go over your report carefully to check for human and other errors. Under the Fair Credit Reporting Act (FCRA), you have the right to dispute inaccurate information on your report.
To do this, you must write and send letters directly to the agency and the creditor identifying the inaccurate information. But it can take months, or even years, to get errors removed or amended from a credit report, so be prepared for a potentially difficult and frustrating process. While you’re taking steps to get errors in your score fixed, look for other options such as an auto title loan that offers a reasonable rate of interest. Repaying them on schedule can help you improve a bad FICO score.
You can get an auto title loan quickly by using your automobile title as collateral. These are subprime loans because they are given to high-risk borrowers, but in a pinch, you can often get your cash in hand in a matter of hours.
Using An Auto Title Loan to Reestablish Credit
The benefit with taking auto title loans is that you get to keep and drive your car while repaying the debt. So taking one will not disrupt your lifestyle in any way, except that you have to provide your auto title as collateral and manage your budget in order to repay the debt on schedule.
Since credit bureaus give more importance to recent activity than to past history, repaying a debt on time will demonstrate the ability to manage your finances responsibly. If you work out a plan to make payments diligently and on schedule, as per the agreement, you can establish a positive payment record that will reflect well on your FICO score.
To use an auto title loan to reestablish credit, its best to take a short-term loan with a lender that offers competitive interest rates, so that you will be paying the least amount of interest over the term. Also find a lender that features no pre-payment penalties so you can repay earlier if possible.